Short-Term Rentals vs. Long-Term Rentals: Pros & Cons

Trying to decide what to do with your rental property? You're probably wondering which option can put more money in your pocket—renting long-term to the same tenant or going short-term with a slew of vacation rentals. It's a big decision that affects your income, time, and stress levels.

Many property owners face this exact choice. You have a house, condo, or apartment that could generate income either way. But the wrong choice might mean leaving thousands of dollars on the table or creating a management nightmare.

Real estate investors especially need to understand how long-term renting offers different benefits and challenges from vacation rentals.

Quick Takeaways: Long-Term Rental vs. Short-Term Rental

• Short-term rentals can earn 2–3x more in tourist areas but require much more work
• Long-term rentals may provide steady income with fewer headaches (great for busy owners)
• Location matters most—tourist spots suit short-term, while residential areas favour long-term
• Short-term rentals need about $2,000–$5,000 upfront just for furnishings
• Regulations can change overnight for short-term rentals (and shut you down completely)

What's Actually Different Between LTR vs. STR?

Short-Term Rentals

Short-term rental properties are like mini vacation homes. People stay for short periods—usually a few days to a few weeks, and very rarely over a month. Think Airbnb, Vrbo, or direct bookings where you're hosting travellers who need a place to crash while exploring your area.

As a short-term rental owner, you're essentially running your own hospitality business. Short-term rentals are furnished and ready for guests to show up with just a suitcase. You're responsible for keeping things like paper towels and soap in stock.

Unlike long-term rentals, short-term rentals require more active day-to-day operations. You're constantly dealing with new short-term guests coming and going.

Long-Term Rentals

Long-term rentals mean leasing to the same tenant for an extended period. Your tenant signs a long-term lease agreement for an empty unit, moves in their own stuff, and treats the place like home.

With a long-term rental property, you're more of a traditional landlord focusing on tenant management on a month-to-month basis. Tenants may report maintenance issues, but you might go years without having to worry about things like hiring cleaners and marketing your rental.

Short-Term Rentals: When They Really Shine

The possibility of higher rental income with short-term rentals can be seriously impressive in the right location.

A property that earns $1,500 monthly as a long-term rental might earn $150–$200 per night as a short-term rental. Do the math: even at 20 nights booked per month, that's $3,000–$4,000. In other words, double the income!

Want to use your property yourself from time to time, especially during the off-season? Short-term rentals give you that flexibility. Block off the calendar when you have visitors or when you need a getaway yourself. Try doing that with a long-term tenant!

Pricing flexibility is another huge plus. Got a big festival or event coming to town? Jack up your rental rates! Slow season? Lower prices to keep bookings coming.

Tax benefits can be better, too. You might deduct more expenses like advertising costs and property taxes as a short-term rental business than you can as a traditional landlord.

The Headaches of Self-Managing Short-Term Rentals

Running a short-term rental takes work. A lot of work. Every guest turnover means cleaning, laundry, restocking supplies, and checking for damage. For a popular property, you may need to run through your hosting checklist three to four times per week!

Ever tried coordinating with cleaning services, managing online listings, and answering endless guest questions? It's basically a part-time job. Many owners spend at least five to ten hours per week self-managing just one rental property.

The peak seasons roller coaster adds another layer to budgeting. Your beach house might be fully booked at $300/night all summer, then sit vacant all winter or go for $100/night. That beach house making $9,000 in July might make a mere $1,500 in January.

You're more likely to run into careless tenants with short-term rentals. Not only do you have more tenants in general, but they have far less motivation to treat your property well when they're only using it for a few days. Rowdy parties have driven many neighbourhoods to vote for rental restrictions.

Regulation changes also keep owners up at night. Imagine building a successful short-term rental business, then your city suddenly bans rentals under 30 days. It happens!

Many owners turn to a property management company after trying DIY property management and getting overwhelmed. But that cuts into profits—commission-based property management fees typically range from 15%–30% of rental income for short-term rentals.

Long-Term Rentals: Why They're Still Popular

Even if long-term rentals tend to bring in less money, consistent income can make them excellent passive income investments.

When your tenant signs a 12-month lease at $1,800 monthly, you know exactly what's coming in—$21,600 for the year. No guessing, no seasonal ups and downs. Unlike short-term rentals, you can generally count on steady cash flow.

The property management load is so much lighter. No constant cleanings, no daily messages from guests who can't find the coffee maker, no restocking toilet paper. Most property managers check in with tenants once a month or less.

Banks love long-term rentals, too. Try getting a loan and telling the bank you'll run an Airbnb—watch their faces! But show them signed rental agreements with steady rent payments, and they'll practically throw money at you. Interest rates are usually better for long-term rental property investments.

Local market conditions have less impact on long-term rentals compared to vacation properties. Even in slower seasons, your residential properties still bring in the same rent. And one of the big drivers of new short-term rental restrictions is local housing needs—as a long-term rental owner, you're providing local housing, not taking it away.

The Not-So-Great Parts of Long-Term Rentals

Let's be honest—you'll probably make less money with long-term rentals in high-demand areas. That vacation condo earning $40,000 per year as a short-term rental might only bring in $24,000 with a long-term tenant.

You can also kiss personal use goodbye. Once you have a tenant with a lease, you can't just decide to use the property for a weekend. That mountain cabin isn't available for your ski trip if someone's living there year-round.

Problematic tenants can become your worst nightmare with a long-term rental. Imagine you leased a duplex to a seemingly perfect tenant who stopped paying rent after month three. The eviction process took seven months and cost $5,000 in legal fees. All while earning zero income.

Property maintenance also falls heavier on your shoulders with long-term rentals. Unlike hotels or short-term rentals, where minor issues might go unreported, long-term tenants expect you to fix everything promptly. (Of course, even minor issues can lead to bad reviews, which can tank a short-term vacation rental business. You should keep up with maintenance with both types of rentals.)

Which Type of Rental Makes More Money?

Location trumps (nearly) everything else in this decision. Is your property in a tourist destination where people vacation? Or in a residential area where locals live year-round?

No matter what you bring to the table as a rental property owner, local market conditions have a huge impact on your potential success. A condo near a popular theme park or a beach house? Short-term rental all day. A single-family home in a regular suburb? Probably better as a long-term rental.

Property features matter too. High-performing vacation rentals need that "wow factor"—high-end amenities, amazing views, or unique character. Basic, functional residential properties often perform better in the long-term rental market.

Another big topic to think through is how much time you can realistically invest. Short-term rentals might bring higher rental income, but they'll suck up five to ten hours of your week in self-managing tasks. Long-term rentals might need just five to ten hours per month. Or less.

Zoning laws and local regulations could make the decision even easier. Some community associations and local governments flat-out ban short-term rentals or restrict them to primary residences. Check before you decide.

Property taxes and insurance can also be higher for short-term rentals in many areas, cutting into your profits. STRs can be subject to sales taxes, lodging taxes, and more.

Ask yourself: Does my property sit in a place where tourists want to stay? If yes, short-term might be worth considering. If no, long-term renting is probably your answer.

Deciding Between Self-Managing or Hiring Property Managers

If you go the short-term rental route, you've got another big decision: do you handle everything yourself or hire property managers?

Self-managing your rental property means more work but keeps more money in your pocket. Depending on your area, property management companies typically charge 15%–30% of your rental income for short-term properties. That's a big chunk! But it can also cut down on stress.

For long-term rentals, property management fees may be closer to 8%–12% of monthly rent. Property managers handle everything from finding tenants to collecting rent payments and coordinating maintenance requests.

Talk to other rental property owners in your area. See how much time they need to spend on property maintenance issues. Ask what property management company they use, and if they believe they're worth the fees.

If you work full-time or own multiple rental properties, hiring a property manager often makes sense. One rental property might be manageable yourself, but multiple properties become a full-time job without help.

Do the Math for Your Property's Cash Flow

Instead of guessing, try running the actual numbers for your property:

• Check what similar long-term rentals charge monthly in your local market. Multiply by 12 for annual income.
• Look up similar short-term rentals on Airbnb, Vrbo, and other short-term rental platforms. Note rental rates across seasons. Estimate realistic occupancy (60%–80% in high season, 30%–50% in low season).
• Calculate your annual short-term income. (High season nightly rate × high season occupancy × high season days) + (Low season nightly rate × low season occupancy × low season days)
• Subtract expenses from both. Remember, short-term rentals have higher expenses—cleaning, supplies, property management fees, advertising costs, etc.

For example, a condo in a great city for Airbnb might get $1,800 monthly as a long-term rental ($21,600/year). As a short-term, it might average $150/night with 70% occupancy ($38,325/year) but have $12,000 in extra expenses, netting $26,325.

Don't forget these key expenses for short-term guests versus long-term tenants:

• Property management: 15%–30% for short-term vs. 8%–12% for long-term, unless you're self-managing
• Cleaning fees: Much more frequent cleaning for short-term
• Utilities: Typically included for short-term, but not long-term
• Property taxes: Sometimes assessed differently based on use
• Insurance: Usually higher for short-term rentals
• Furnishing costs: Super important for short-term rentals

Make an Informed Decision For Your Rental Property

Short-term rentals can make more money in popular tourist destinations if you can handle the workload or afford to hire property management. Long-term rentals win for reliable income with minimal hassle in residential areas.

That's just a simple summary, but your circumstances matter too. Got a full-time job and a busy schedule outside of work? The time commitment of self-managing short-term rentals might not be worth the extra income. Have more time, or already work in property management? Short-term could be perfect for you.

Whichever way you're leaning, you should still talk to other property owners or a local real estate agent who knows the rental market in your area before renting out your house. They can give you realistic numbers based on actual performance, not just potential what-if scenarios.